California Court of Appeal Finds Hospitals Do Not Have a Duty to Disclose ER Level Fees

King & Spalding

On June 17, 2022, the First Appellate District of the California Court of Appeal issued a decision in Saini v. Sutter Health, Case No. A162081, affirming the decision of the Superior Court in Alameda County to dismiss class action claims against Sutter Health with prejudice. This case mirrors several cases throughout California and the country where plaintiffs’ attorneys are attempting to use class action cases to impose a new duty on hospitals to disclose to emergency room patients—before providing emergency care—the existence, amount, and intent to charge certain emergency room charges, specifically the five emergency room level fees (ER Level Fees). The California Courts of Appeal have recently issued prior two decisions on this issue, one unequivocally finding that this alleged duty to disclose does not exist and one finding that the duty may exist in certain circumstances. This new case, Saini v. Sutter Health, affirmatively came down on the side that the duty to disclose ER Level Fees does not exist as a matter of law. Although unpublished, the Saini decision is nonetheless an important development of California law in this area as hospitals continue to try to defeat these class actions throughout the state. King & Spalding represented Sutter Health in this matter.

The ER Level Fees, also known as “evaluation and management fees,” are assessed for emergency room care in levels 1 through 5 depending on the intensity of hospital resources used to treat the patient. The plaintiffs in these cases allege that, under the California Consumer Legal Remedies Act (CLRA) and/or the Unfair Competition Law (UCL), a duty to disclose these fees exist for two separate reasons: (1) because they are “exclusively known” to the hospital and not “reasonably accessible” to patients, or alternatively, (2) because the hospital “actively conceals” these fees. In this case, King & Spalding argued on behalf of Sutter Health that no such disclosure duty exists because under both state and federal law, hospitals are required to make all of their charges publicly available—including posting them online—and there is no allegation that the hospital does not comply with existing state and federal price transparency and disclosure requirements. The plaintiffs’ attorneys contend that existing disclosure requirements are inadequate—that hospitals must also post signage in their emergency room about these five charges (but not any other charges a patient may incur) and must verbally disclose these five charges to patients before providing emergency care (even though the hospital will not know which of the five levels will apply to that particular patient and that a patient’s financial responsibility for the fees will depend on their insurance status).

The California Court of Appeal has recently issued two published decisions, Gray v. Dignity Health (2021) 70 Cal.App.5th 225, in the First Appellate District, and Torres v. Adventist Health (2022) 77 Cal.App.5th 500, in the Fifth Appellate District, which appear to be in conflict with each other on whether this duty to disclose these ER level fees exists. The Gray decision is better reasoned because it addresses the fact that the federal government and California state statutes and regulations already extensively regulate hospital disclosure requirements regarding their charges and expressly do not require hospitals to make the additional disclosure sought by the plaintiffs in these cases—a disclosure which could have disastrous consequences if it causes a delay in the provision of emergency medical care to patients who need it. Torres found a duty to disclose ER level fees existed as to the particular hospital at issue because the plaintiff in that case alleged that the online charges were not “reasonably accessible” to her because the chargemaster did not list CPT codes associated with the fees and because the description of the fees in the chargemaster were “highly abbreviated” and therefore “meaningless” to consumers. However, the Torres court also found that even though the duty to disclose may exist, the ER level fees were not “material” to that particular plaintiff because she was assessed a level 5 fee—indicating a highly severe injury or illness with a significant threat to her life. The result of Torres would suggest that a hospital’s duty to disclose ER level fees is dependent upon the severity of a particular patient’s condition, which is not a workable result for hospitals, as they would be forced into the impossible position of trying to assess the severity of a patient’s condition before providing care in order to determine whether a further notice of ER Level Fees is required.

In our case for Sutter Health, the First Appellate District chose to follow Gray and distinguished Torres on its facts, on the grounds that the plaintiff’s complaint admitted that Sutter Health’s chargemaster listed the ER Level Fees and did not allege the same detriments in the hospital’s existing disclosures. The Court of Appeal rejected every argument plaintiff made that Gray was wrongly decided and agreed with Gray that “state and federal legislative bodies are in a superior position to balance” the goals of price transparency with requirements that all hospitals treat patients presenting to their emergency departments regardless of patients’ ability to pay for the care.

This is a great win for our client and for hospitals across the country engaged in the ongoing fight against overreaching class action disputes attempting to impose new improper disclosure duties on hospitals through the courts.

The California Court of Appeal’s June 17, 2022 opinion is here. The plaintiff may appeal this decision to the California Supreme Court.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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